Correlation Between AutoZone and Origin Agritech
Can any of the company-specific risk be diversified away by investing in both AutoZone and Origin Agritech at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining AutoZone and Origin Agritech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AutoZone and Origin Agritech, you can compare the effects of market volatilities on AutoZone and Origin Agritech and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in AutoZone with a short position of Origin Agritech. Check out your portfolio center. Please also check ongoing floating volatility patterns of AutoZone and Origin Agritech.
Diversification Opportunities for AutoZone and Origin Agritech
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between AutoZone and Origin is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding AutoZone and Origin Agritech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Agritech and AutoZone is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on AutoZone are associated (or correlated) with Origin Agritech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Agritech has no effect on the direction of AutoZone i.e., AutoZone and Origin Agritech go up and down completely randomly.
Pair Corralation between AutoZone and Origin Agritech
Assuming the 90 days horizon AutoZone is expected to generate 1.62 times less return on investment than Origin Agritech. But when comparing it to its historical volatility, AutoZone is 4.53 times less risky than Origin Agritech. It trades about 0.03 of its potential returns per unit of risk. Origin Agritech is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 290.00 in Origin Agritech on September 3, 2024 and sell it today you would lose (48.00) from holding Origin Agritech or give up 16.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AutoZone vs. Origin Agritech
Performance |
| Timeline |
| AutoZone |
| Origin Agritech |
AutoZone and Origin Agritech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AutoZone and Origin Agritech
The main advantage of trading using opposite AutoZone and Origin Agritech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AutoZone position performs unexpectedly, Origin Agritech can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Origin Agritech will offset losses from the drop in Origin Agritech's long position.| AutoZone vs. NORTHEAST UTILITIES | AutoZone vs. GameStop Corp | AutoZone vs. HOCHSCHILD MINING | AutoZone vs. VARIOUS EATERIES LS |
| Origin Agritech vs. Gamma Communications plc | Origin Agritech vs. Chunghwa Telecom Co | Origin Agritech vs. Citic Telecom International | Origin Agritech vs. Ribbon Communications |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Transaction History module to view history of all your transactions and understand their impact on performance.
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